Quality costs record
| Quality costs record |
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| See also |
The Quality costs record is the information for calculating, planning, analysis and optimization. Therefore, it should answer the questions: what kind of costs are in the enterprise? where they arise? and what is their height [1].
The rules for determining the places of recording quality costs
In determining the number of places of recording quality cost one should be guided by the principle of economy and the principle of giving expression data [2]. The second of these principles relates to the necessary amount of information that can not be neither too high nor too low. This information should be related to: company size, organizational structure and how it links with quality management system and TQM. It should also include information about the chart of accounts in the company and methods of accounting used.
Methods of keeping records of the quality costs
Records of quality costs can be based on the current chart of accounts in the company. In some cases, however, it is necessary to make changes. Then records may be conducted by: the type of costs occurring in a given company, the type of activity and media costs, or other expense recognized in respect to the products [3].
Due to the type of activity one should take into account the costs according to their actual places of origin. Recording of costs by their disclosure places is inappropriate.
The quality costs from the standpoint of their origin include: the costs of appearing before production, during production, after production and after sales. Before production and during production are the costs of prevention. During production and post production costs are estimates and internal failure costs. However, after production can occur external failure costs.
Methods of keeping records of the quality costs
Records of quality costs can take different forms depending on the needs. The methods are [4]:
- quick,
- constant,
- sampling.
Quick one-time cost of diagnosis is to determine approximately the amount of costs, and the results of registering can be used to evaluate the potential of the company. Constant uniform method of recording the cost is to conduct quality cost analysis and provide rapid response in the event of a deviation from the assumed costs. Sampling concerns on rapid one-time costs diagnosis based on accounting data.
Difficulty in recording quality costs
Difficulties in the recording quality costs most often are the result of costs of non-production activities and recording of returns (complaints). Difficulties may also arise from problems associated with determining what portion of overall costs is the cost of quality. Quality costs are part of the costs incurred by the company. They are recorded in the accounts under different headings. Therefore, you should allocate costs to the appropriate category and pay attention to the risk of double accounting for the same costs.
Examples
Registration of the costs is mostly done in manufacturing companies. However traders record only part of the cost of the reception quality check and losses from repricing goods. However they do not lead separate accounts of other costs resulting from poor quality products on sale, because all costs and losses are included in the cost of commercial risks, in which the company is interested only when they have a significant impact on profitability.
References
- Aoieong R.T., Tang S.L. & Ahmed S.M. (2002), A process approach in measuring quality costs of construction projects: model development, Construction Management and Economics, Volume 20, Issue 2
- Wen-Hsien Tsai, (1998) Quality cost measurement under activity-based costing, International Journal of Quality & Reliability Management, Vol. 15 Iss: 7
- Hwang G.H. & Aspinwall E.M. (1996), Quality cost models and their application: A review, Total Quality Management, Volume 7, Issue 3
Author: Teresa Spiewla
